Welcome to MeanMesa! The blog for those who have become suspicious of everything else...

Tuesday, December 20, 2016

Trump Economy - Inflating the Bubble

Trump As the Second Un-Elected

Republican President

The mysteries surrounding the man make him

an inescapably romantic figure, right?

After losing the election handily to his opponent, Hillary Clinton, Donald Trump is now preparing to take control of the White House as the second in a recent series of un-elected Republican Presidents. Although there are many troubling aspects to this prospect, perhaps one of the most threatening -- aside from his belligerent military instability -- for a wide number of Americans is Mr. Trump's plan for managing the US economy.

The 2016 election campaigns of both Parties, traditionally intended to communicate candidates' policy ideas to the voters, were complete failures in this respect. Politically, Trump managed to keep what might have otherwise been this "educational aspect" of the campaigns little more than a useless cat fight between contending personality cults.

At the infrequent junctures of his campaign where he addressed possible economic policy such comments lacked any particular substance or details. Unhappily, for the largely politically illiterate voter base which supported him this lack of serious definition caused very little concern. Importantly, although Mr. Trump may actually have some ideas about the national economy, his campaign managed to avoid much mention of them.

Whatever the "Trump economic policy" might be, the current "best guess" remains as opaque as the man's personal finances. Is he really a billionaire? Has he ever paid taxes on the profits of his enterprises? Is he in serious debt to foreign banks in Germany and Russia? Can Trump enterprises' long record of lawsuits to contractors, investors and business associates be dismissed as "innocent and inevitable happenstances" of conducting business reputably? The list of questions seems to be growing longer as every day passes.

The Economic Disaster of the Previous Un-Elected Republican President

It's terribly cruel and unfair to suddenly demand

that a Republican can run the economy.

There's no need to delve into the catastrophic chaos of the Bush W. administration's twisted economic policy. The outcome speaks for itself. Culminating in the bloody global economic collapse of 2008, the entire effort of eight years of Republican administration literally shook economies around the entire planet. Although the Obama years have seen a marked improvement, economic experts estimate that it will require as many as two decades of stable growth to permanently rectify the damage.

Are we now preparing to extend those "two decades" to four or five?

To answer this question we must identify similarities between the two administrations. Unhappily, even peering through the fog of politically manufactured uncertainty about Trump's plans, there are many unsettling signs of the same thing happening again. Here, we can add two words to that dismal prediction: "sooner" and "worse."

The record of the economic results of complete Republican control of both houses, the White House and the Supreme Court has, historically, been devastating, in this case, the Great Depression. These were the political conditions in the US government just prior to the 1929 economic collapse.

Although overly simplified charts showing inaccurate accounts of various Presidential economic performance readily prove practically any proposition, the elevation of Trump relied very heavily on the now infamous "fake news" which showed the Obama Administration's performance as a bleak rampage of deficit spending and debt expansion.

The following Washington Post article by Ezra Klein [one of MeanMesa's favorites] fills out the comparison between the Bush W. and the Obama economies in a refreshingly rational manner. [You can read the entire article here/WASHINGTONPOST]

The stunning difference between the economy under the un-elected President Bush W's Administration and the elected President Barack Obama's Administration. Americans will vote for what they want if they have the opportunity. [image]

Populist Donald Trump -

"Champion of the Working People"

New Wealth Shoots To the Top 1%.

Make that the Top 1/10th% of the Top 1%.

Hang on to your hats! You haven't seen anything yet.

Trump desperately needs to accomplish something that Republican Presidents have historically found almost impossible.

He needs to expand the national GDP by any means possible while increasing employment, raising wages for the confused middle class who supported him and avoiding huge annual deficits. MeanMesa suspects that the President-elect intends to employ a rather un-American scheme to "deliver the goods" as he attempts to meet these expectations. Although he will enjoy the luxury of presiding over a Republican controlled House and Senate, he shouldn't get his hopes up with an expectation that all those power hungry, GOP tea baggers, "industrial revolution" ideologues, banksters and other straggling, sold out dead enders will necessarily share his enthusiasm.

The Donald has been quite eager to claim that -- under his leadership -- the rate of the national GDP will grow to 4-5%. Unhappily, the semi-conscious "patriots" who eagerly voted for him have the wild expectation that some of that growth will...wait for it...trickle right down to their level. That is unlikely in the long term.

In the short term a milder version of this lower class dream can be accomplished with lots of borrowing and deficit spending by the Republican saturated Washington, DC.

[Economic Policy Institute]

During Trump's "campaigning," he collected all the "economically disenfranchised" voters he could find in the rust belt and fly over states. He very professionally teased their despair with plenty of blame and promises, embellishing their distrust of the nation's recent economic performance with literal glaciers of fact-free propaganda scowled out to the boisterous mobs at his rallies.

The useless, industrial, domestic media reported every word without so much as a whimper concerning the fact that most of it was false -- sewn from whole cloth by a man whose greatest notoriety derived from a television reality/sit com show.

The chart [aboveright] shows a picture of where new wealth was headed in 2011, just as the US economy was starting to recover from the last Republican disaster [These "top enders get everything" trends are worse now than they were then.]. Importantly, back in 2011 we were all reassured because the national GDP was beginning to, once more, grow at a feeble, yet positive rate. However, when we face facts, we realize that pumping newly created wealth into the top 1% feeds the GDP figures in exactly the same way increased earnings among the middle class would have if they had occurred -- even if they didn't.

Now, President-elect Trump has surrounding himself and packed his cabinets with self-identified devotees of this idea that, "Yes, GDP is going to grow. The reason it will grow is because all of us billionaires are going to get even richer -- and that counts as economic growth!"

How to Inflate the Bubble

Seek out among these financial geniuses

to see who can blow the hardest.

As mentioned before the President-elect must find ways to rapidly increase the nation's GDP. [During the Obama recovery, the GDP has increased from around -8% at the end of the Bush W. train wreck to a meager but steady growth rate around 2-3% -- and increase in the rate of around 10-11%. A 2-3% growth rate is lower than the US has traditionally generated in recent times. To make good on his ambitious promise, Trump would need better than 4-5% annual GDP growth rate.] The inevitable fact that the new wealth will be destined almost exclusively for the dynastic treasures of the US oligarch class has never been considered a serious political problem for Republicans. The middle class Americans who will probably be left out of this equation's "new prosperity" have grown accustomed to deteriorating standards of living, increasing costs and stagnant wage levels since the Reagan era.

The American voters who supported Trump remain, generally, unaware of any of these trends and statistical facts. Thanks to the meat handed propaganda these voters are considering "news," MeanMesa predicts that most of them will consider the [following] likely examples of Trump's probable economic course to be evidence of "spectacular, genius level, leadership." Temporary, modest increases in the GDP will be interpreted by this crowd as an "economic breakthrough."

Reduce Social Security, Medicare and Medicaid Expenses

The Republican House Speaker has repeatedly expressed various plans -- including more than one "Annual Budget" -- to reduce the existing levels of Federal payments for these three programs. While Trump's campaign included the repeated, very specific "promise" to "protect" current payments for these program benefits, he has since the election moved to within an "intimate" range with House Speaker Ryan on many of the Speaker's favorite "pets."

If the Trump Administration -- with enough complicit Congressmen and Senators -- manages to lower benefit payments while retaining the massive Social Security Trust and continuing the "paycheck contributions" at their current level, he will effectively lower the current deficit and, given time, the existing total national debt. Anyone naive enough to expect Donald Trump to "live up to his word" is either in a coma or has been saturated with the very, very suspicious propaganda narrative about the man in the corporate media.

Although none of these changes would be popular with the vast majority of US voters, we have already seen the Republican Congressmen and Senators repeatedly willing to "take their political lumps" by casting votes for special interests against public opinion in order to sustain the flow of billionaire dollars filling their campaign treasuries.

The Social Security Trust fund is full of readycash -- and more than a few dollars worth of "special issue" treasury notes which are "payable on demand." It represents an alluring attraction for a Republican desperate to pump stolen money into the economy in the search for that elusive GDP gain. In the last few decades Republican Presidents have proven over and over that theycannotgovern.

Legislation to Spend on Infrastructure Trump, perhaps as a clumsy mistake or innocent over sight, actually spelled out a few of the eerie economic sides of his "rebuilding America" plans. His idea for this would be the now "fashionably chic" concept of using a mix of government and private funds to accomplish this feat without a sky rocketing impact of the Federal budget.

However, on closer examination, the fenders were already "flying off the truck."

It turns out that The Donald's idea of "sensible infrastructure programs" were actually just the industrial wish lists of those very same, altruistic, patriotic interests who were intending to make these investments anyway. Further, those "investments," rather than miles of repaired interstates, public school buildings roofs, dams, bridges or flood levees, were for projects specifically directed toward increasing their corporate interests and assets.

The "Trump addition" to this "Mad Hatter's Birthday Party" came in the form of gigantic tax incentives to compensate these busy billionaires as they were, of course, ...wait for it...Rebuilding America.

Rapidly Expand Corporate ProfitRemember, corporate profits disappear right into the all encompassing "stew pot" of national economic activity when it comes to calculating GDP figures.

"Gross Domestic Product (GDP) is the broadest quantitative measure of a nation's total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time."

[Raw GOOGLE]

What does this mean?

While there have been some spectacular "opportunities" for Trump now unstoppable "profit machine," such as the relaxation of the post Crimean invasion sanctions opening a clear path for the half trillion dollar merger of EXXON and ROSNEFT, the President-elect's now well positioned billionaires are "discovering" all sorts of other tasty "business opportunities" across the board.

We are watching a breath taking shift in changing values. Prior to Trump's election numerous decisions based on traditional American values had imposed "legislative discouragements" to some of the oligarch classes "favorite money makers." For example, EPA regulations had prevented industries from taking advantage of saving expenses by dumping wastes in the nearest river. Banking regulations had established a separation between high risk taking and regular banking for the big guys and their hedge funds.

Perhaps most painful of all, ObamaCare [ACA] had undercut the wild, anything goes, profits to be made with corporate extraction process of the pre-ACA health insurance industry as it took its "cut" of the $6 Trillion/year US health care budget.

All of these "legislative discouragements" had been put into place to protect the interests of American citizens. In each case the corporate "cost" of implementing such laws had been deemed to be a reasonable price for protecting average citizens, sustaining access to reasonable living standards and guaranteeing a sort of minimum quality of life for those with wealth levels below those of the oligarch class.

Trump's "expand the GDP at any cost" strategy will target every one of these laws. Values have indeed changed. Corporate profit -- and an artificially expanded GDP -- will become the highest priority. The whole scheme is deliciously complicated. Trump supporters will take months or years of continuously deteriorating living conditions before they even begin to notice.